Biotechs, Apple have different patent needs

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As the court battle continues over whether Samsung copied patented technologies in Apple’s iPhone, calls for reform of the US intellectual property system keep getting louder.
To critics, the thousands of arcane patents that cover an iPhone, and that form the basis of the lawsuit between the two technology behemoths, show that too many patents are being issued for obvious or minor improvements.

Yet even if weaker patent terms and other changes make sense in the realm of consumer technology, today’s strong patent protections are crucial to the biotechnology industry, which forms a key part of the Massachusetts economy.

A fundamental goal of our patent system should be to foster innovation, and legitimate concerns are being raised whether our current system is helping, or hindering, progress. Some of the same criticisms leveled against consumer-technology patents have also been raised for the much more expensive and protracted enterprise of discovering important new drugs to treat life-threatening diseases.

Yet the world of drug development is vastly different from that of Apple and the iPhone — in a variety of crucial ways.

First, electronics
tend to be made up of many different components, plus software, with each of these parts covered by myriad patents. As the Biotechnology Industry Organization has noted, any
given high-tech product may be covered by thousands of patents, while a typical biotechnology drug tends to be covered by only a handful of patents. Hence, the value of any individual patent is often much greater in biotech than in the technology sector, where large companies will on occasion trade portfolios of thousands of patents in a single business transaction.

In contrast, a biotech company may depend for survival on only a handful of patents. Our current US patent system affords important protections, allowing biotech drug development to continue to attract modest levels of investment.

Second, the development cycle of new biotechnology drugs is much longer, often by more than a decade, than for smartphones or other devices with development cycles of a few years or less. Once on the market, biotech drugs tend to have a long product life cycle and often do not get replaced for a decade or more. The cost of developing a new drug, well in excess of $1 billion, is often not recouped until late in the products’ life cycle.

For that reason, biotech innovation requires strong patent protection for a long period. Otherwise, industry would not be able to invest in new drug innovation. In contrast, technology products are much less expensive to develop, and are expected to generate net profits in the few years in which they can capture market share before being replaced by newer, incrementally advanced products.

Finally, because electronic devices reach the market more quickly and inexpensively than a typical biotech drug, the current system effectively grants them many more years of patent protection. This has led to proposals to shorten the duration of technology patents, but not biotechnology ones. Making this distinction is crucial, because any shortening of novel drug patents could have a devastating effect on an already much-diminished biopharmaceutical innovation industry.

As it is, most major pharmaceutical companies are slashing budgets for research and development. Pfizer, for example, is cutting a research and development budget that was once about $11 billion to roughly $6 billion per year.

I am an ardent user of the amazing new smartphones. It is exciting that the technology sector is so adept at providing consumers with a wide range of exciting options for new devices. Contrast this picture with the dearth of important new drugs for devastating illnesses like Alzheimer’s or many lethal cancers, where there are currently no good treatment options.

However the Apple-Samsung battle ends, and no matter what happens with electronics patents in general, we need to keep a strong patent system in place in order to foster the discovery of important novel biotechnology drugs.